The Farm Bill: Now a Bailout for Moscow

Less than a week after solemnly passing a bill mandating a
balanced federal budget by 1991, the U.S. Congress has sent to the
President a farm bill that will cost taxpayers at least $52 billion
over the next three years. Although the bill will lower price
supports for most commodities, it will not begin to lower cash
subsidies for up to two years, and makes no effort to channel
benefits to needy farmers. Further, the bill would quietly create a
massive new export subsidy program by which Americ a n taxpayers
will be required to help pay for the purchase of farm commodities
for the Soviet Union. Such a programis not only unfair to
taxpayers, but would unneccessarily aid the Soviet Union by bailing
out its economy and could hurt economic relations w i th Western
European allies. This export program would require the Secretary of
Agriculture to provide $2 billion worth of commodities
to.exporters, processors, and foreign buyers of American farm
products over the next three years. While the legislation d o es
not specify any particular countries to receive this subsidy, farm
experts insist that it would be nearly impossible to distribute
such a large subsidy without providing a major share to the Soviet
Union. In any case, since some of the subsidies will b e
distributed through exporters and processors, it would be difficult
in practice to exclude any particular nations. Export subsidies in
any form are generally bad ideas. While they do increase exports,
they do not improve the overall economy, since the in c rease in
exports will be paid for by the U.S. Treasury. The subsidy program
in this bill is said to be necessary to counter the unfair trade
practices of other nations. Since many other nations subsidize
their agricultural exports, the U.S. needs to do so to "level the
playing field," the argument goes. However, it makes little sense
to harm American taxpayers just because other nations are doing the
same to theirs. More important, the farm bill does not merely
counter the unfair practices of other nations --it will decrease
sales of all other nations, whether or not they engage in unfair
trade practices. The likely result will be

retaliation by these nations against the U.S., to the detriment of
world trade. The program would also be inconsistent with U.S .
policies toward the Soviet Union, and hurt economic relations with
Western Europe. Since the Reagan Administration took office in
1981, it courageously has taken the position that the U.S. should
not provide any subsidies to the Soviet Union. Although t r ade
with the Soviet Union was, and is, considered important,
subsidizing that trade is a different matter. This position was
established formally in a directive issued by the National Security
Council in 1982. It declared that no trade subsidies should be
provided to the Soviets. This was a wise decision which the
President now should not repudiate. Ronald Reagan has consistently
advocated that West European nations also not subsidize the Soviet
economy. Thus, due to American pressure, the organization for
Economic Cooperation and Development, a coalition of Free World
industrial nations that promotes economic growth, in 1982 issued
new guidelines effectively prohibiting subsidized credit to the
Soviet Union. Further, the need to cautiously handle economic r
elations with the Soviets was recognized by the Western leaders in
a communique following the 1982 economic summit at Versailles.
Adoption of the farm bill's export subsidy violates this policy.
The West European nations likely would feel confused and bet r ayed
as the U.S. began to do the very thing it has urged them for so
long not to do. This would only increase their skepticism the next
time the U.S. asks them to take a harder stance against the
Soviets. This new subsidized export program is but one of'm a ny
reasons for the President to veto the farm bill. In addition, it is
much too expensive, does not help the farmers most in need, and
continues many of the policies which helped bring on the current
tarm crisis. Ronald Reagan should not hesitate to send the bill
back to Congress to be rewritten. The U.S. needs a new farm bill.
The measure on the President's desk is not it.